OpenAI has officially signed a jaw-dropping $300 billion cloud computing deal with Oracle, marking one of the largest tech infrastructure commitments ever made.
Quick Summary – TLDR:
- OpenAI will spend $300 billion over five years with Oracle to power Project Stargate starting in 2027
- The agreement includes building 4.5 gigawatts of data center capacity, more than two Hoover Dams
- The deal sent Oracle’s stock skyrocketing, making Larry Ellison the richest person in the world
- It’s a high-stakes gamble for OpenAI, which is burning cash fast and betting on future AI growth
What Happened?
OpenAI and Oracle have signed a historic agreement worth $300 billion for computing power over the next five years, beginning in 2027. This monumental cloud deal is part of Project Stargate, a multi-billion dollar data center initiative announced earlier this year. The financial details now put hard numbers behind OpenAI’s ambitious infrastructure plans.
A Cloud Contract Like No Other
This deal is being called one of the largest cloud computing contracts ever. OpenAI’s commitment to Oracle dwarfs its current revenue, signaling just how aggressively the AI company is betting on the future. In 2024, OpenAI expects to bring in $12.7 billion in revenue, yet it is committing to spend nearly 24 times that amount on compute power alone.
Oracle and OpenAI will build out 4.5 gigawatts of compute capacity, an energy output that rivals two Hoover Dams or the electricity usage of four million U.S. homes. This massive infrastructure is the backbone of Project Stargate, which aims to position the U.S. as a global leader in artificial intelligence.
The Origins of Project Stargate
Announced at the White House in January, Project Stargate was introduced by OpenAI CEO Sam Altman, Oracle CTO Larry Ellison, and President Trump. At the time, the consortium pledged to invest at least $100 billion in AI infrastructure. That figure has since ballooned to a $500 billion commitment, with more than half already secured.
A major construction site is already underway in Abilene, Texas, with additional developments expected, including a massive data center complex in the United Arab Emirates. That international venture involves SoftBank, G42, and other financial stakeholders, with G42 agreeing to match its UAE investments with U.S.-based data center funding.
Oracle’s Big Leap
Oracle’s transformation from traditional database software giant to AI infrastructure powerhouse is now complete. In the latest earnings report, CEO Safra Catz hinted that three major customers had signed four multi-billion dollar contracts. Oracle added $317 billion in future contract revenue, which helped propel its stock price by over 42 percent.
This financial momentum pushed Larry Ellison past Elon Musk to become the world’s richest person, a direct result of the OpenAI partnership.
High Risk, High Reward
Despite the excitement, this deal is not without risk. OpenAI is not yet profitable and reportedly told investors it does not expect to be until 2029. The company is also working with Broadcom on a $10 billion custom AI chip project, adding even more pressure on its finances.
Meanwhile, Oracle is taking a big bet by leaning heavily on one client. The company’s debt-to-equity ratio stands at 427 percent, far higher than competitors like Microsoft or Amazon, suggesting that this infrastructure play stretches its financial capacity.
SQ Magazine Takeaway
I think this deal is a huge moment in the AI industry. OpenAI is betting everything on compute power, and Oracle is trying to turn itself into the backbone of the next generation of technology. It’s bold, risky, and massively expensive. But if ChatGPT and its future cousins become essential to how we work and live, this might be the smartest tech investment of the decade. For now, it’s a wait-and-see moment, but the scale alone makes it historic.
